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NEW YORK – June 19, 2017 – Why did my doughnut cost 99 cents this morning instead of a simple, even dollar? It turns out that the price has less to do with cost or value and more to do with how our brains process numbers.

Our brains are good at some things but not others. We are terrible at crunching numbers, for example.

But we excel at quickly processing our environment – for instance, if we see a long object moving on the ground, we don’t calculate its trajectory and motion. Instead, we just run – better to take the risk of embarrassment (a twig on the ground) than risk being bitten by a snake.

To do this, our brains need to take in a relatively small amount of information and make up the rest using previous experience, expectations, and predictions.

Your brain is a cheater

The brain cheats, taking shortcuts and making snap judgments instead of carefully deliberating the facts. Most of the time, this is a good thing, because shortcuts are efficient and usually get you to the same place as the long way.

All business owners should consider experimenting with prices. Thanks to brain science, we now know that even a one-cent change can make a big difference.

Consider using a number that the human brain is likely to round down to make your product appear to be a better value. As a consumer, just becoming aware of your brain’s shortcuts can make you a more careful buyer.

Numbers are an easy place for the brain to take a shortcut. We tend to be great at making estimations but horrible at rounding. When our brains see a price tag with lots of numbers, they automatically estimate, so $4.99 ends up closer to $4 than $5; $66,999 becomes $66,000 or sometimes even $60,000. Psychologists have known this for decades, and economists now begrudgingly admit it as well.

Psychological factors

Businesses have used pricing tricks for years to their advantage. They figured out by experimentation that tiny differences in pricing can make big differences in sales, and researchers studied this effect in depth in the 1990s and early 2000s.

They found that there is often a big sales difference between $2.99 and $3, but dropping a product’s price from $2.24 to $2.23 does not yield a measurable increase in sales. A penny is not always worth a penny.

Of course, there are other psychological factors at work in pricing. Relative pricing plays an important role: A product’s price compared to the products physically surrounding it can impact its sales. That is why gas stations not only charge per gallon to the nine-tenths of a cent but also price match to the competitor across the street. The human brain is especially good at making either/or comparisons and especially bad at decimals.

How shoppers can prevail

This strategy applies to shoppers as well. If you’re buying a 99-cent doughnut, think $1. A penny probably won’t break your budget, but rounding bias becomes more important for a larger purchase.

A $399,000 house is pretty much $400,000, but not in your mind: your brain’s shortcut system will try to suggest it’s closer to $300,000.

When the stakes are that high, don’t just think about it. Remember, our brains are better at thinking than “we” are and will continue to trick us!

To combat this, physically write down the price on a piece of paper, strike through it, and re-write the appropriate number by rounding up. The best defense is always a strong offense.

WASHINGTON – June 22, 2017 – The three largest credit-reporting agencies will begin cleaning up credit reports in July, which could help lift the credit scores of about 12 million consumers.

In a survey by the Federal Trade Commission (FTC), one in four people say they spot errors in their credit reports, most commonly concerning tax liens and civil judgments.

Up to half of tax lien data on a credit report is inaccurate or incomplete, says Eric J. Ellman, senior vice president for public policy and legal affairs at the Consumer Data Industry Association. Civil judgments – which means a court has ruled a person owes money – also tend to be ripe with errors or omissions on a credit report, experts say. Consumers can dispute the errors, but the process can be cumbersome.

Beginning July 1, Equifax, Experian and TransUnion will automatically exclude tax lien and civil judgment records from credit reports if they are missing a person’s name, address, Social Security number or date of birth. Claims that do contain this key information, however, will remain on credit reports.

Six percent of Americans with a credit score – or 12 million – likely will see their score go up once the new policy takes effect. About 11 million could see an increase of about 20 points.

“A lot of people who have liens or judgments against them already have crummy credit to begin with,” says Keith Gumbinger, vice president at HSH.com, a mortgage resource website. “A 10- or 20-point increase isn’t going to make a difference for a lot of borrowers.”

But borrowers who are on the cusp of qualifying for a home loan may stand to benefit the most. For example, Gumbinger says, a would-be buyer with a credit score of 570 who receives a 10-point uptick may be able to qualify for an FHA loan. FHA loans require a minimum 580 credit score.

Source: “Have a Bad Credit Score? It Could Soon Get Better – But Is It Enough to Buy a Home?” realtor.com® (June 22, 2017)

“In many ways, housing is an invisible crisis,” says Jonathan Reckford, CEO of Habitat for Humanity International. “There are still too many families without access to safe, secure and affordable housing. This survey highlights the value all of us place on a decent place to call home and underscores the critical need to increase access to affordable housing.”

Owning a home is a key rung on the ladder of economic advancement. What happens if that rung remains elusive for many?

According to the survey, nine out of 10 Americans say owning a home is one of their greatest achievements in life. Also, 68 percent of U.S. renters say owning a home is one of their chief goals, according to the survey. PSB, on behalf of Habitat for Humanity, surveyed 1,000 people in the U.S. and Canada to gauge their perceptions of, and challenges to, affordable housing.

Ninety-one percent of American homeowners credited owning a home with making them more responsible, and 44 percent said it helped them build a nest egg. Forty-one percent say homeownership has given them stability.

But homeownership remains out of reach for many. Nine out of 10 Americans and Canadians say it’s important to find solutions to the lack of affordable housing. At 59 percent, concerns regarding U.S. affordability in particular easily topped other housing issues like safety (16%) and quality (11%).

One major barrier to homeownership cited among survey respondents: the high cost of rent. Eighty-four percent of survey respondents said the high cost of rent was preventing them from buying, followed by 75 percent who said obtaining a mortgage was proving to be a big barrier.

Many of the survey respondents said they’ve struggled to pay housing costs at some point in their life. Among U.S. respondents, 27 percent of respondents said they struggled to pay housing costs in their 20s; 22 percent in their 30s; 11 percent in their 40s; and 9 percent in their 50s.

NEW YORK – June 27, 2017 – The Conference Board Consumer Confidence Index increased moderately in June after dropping a bit in May. Overall, consumers have a rosier picture of their situation today, but they’re a bit less optimistic about the future.

The Index now stands at 118.9, up from 117.6 in May. The Present Situation Index increased from 140.6 to 146.3, while the Expectations Index that gauges attitudes about the short-term future declined from 102.3 last month to 100.6.

“Consumer confidence increased moderately in June following a small decline in May,” says Lynn Franco, Director of Economic Indicators at The Conference Board.

“Consumers’ assessment of current conditions improved to a nearly 16-year high (July 2001, 151.3),” Franco adds. “Expectations for the short-term have eased somewhat but are still upbeat. Overall, consumers anticipate the economy will continue expanding in the months ahead, but they do not foresee the pace of growth accelerating.”

Present Situation Index
Consumers’ appraisal of current conditions improved in June. Those saying business conditions are “good” increased from 29.8 percent to 30.8 percent, while those saying business conditions are “bad” declined from 13.9 percent to 12.7 percent.

Consumers’ assessment of the labor market was also more positive. Those stating jobs are “plentiful” rose from 30.0 percent to 32.8 percent, while those claiming jobs are “hard to get” decreased slightly from 18.3 percent to 18.0 percent.

Expectations Index
Consumers, however, were less optimistic about the short-term outlook in June. The percentage of consumers expecting business conditions to improve over the next six months decreased from 21.5 percent to 20.4 percent, however, those expecting business conditions to worsen also declined marginally – from 10.3 percent to 9.9 percent.

Consumers’ outlook for the labor market remained mixed. The proportion expecting more jobs in the months ahead increased from 18.6 percent to 19.3 percent, but those anticipating fewer jobs increased from 12.1 percent to 14.6 percent.

The percentage of consumers expecting an improvement in their income rose from 19.1 percent to 22.2 percent, but the proportion expecting a decline increased slightly from 8.7 percent to 9.2 percent.

The monthly Consumer Confidence Survey, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a global provider of information and analytics. The cutoff date for the preliminary results was June 15.

COSTA MESA, Calif. – Nov. 10, 2016 – Overall satisfaction scores have increased year over year, but a high percentage of homebuyers still have regrets about their mortgage lender, according to the J.D. Power 2016 U.S. Primary Mortgage Origination Satisfaction Study.
The study found that 1 in 4 (21 percent) customers purchasing a home express have regrets about their lender, a claim voiced even more by first-time buyers (27 percent).
Among customers who regret their decision, there are two distinct situations:
Customers who have a poor experience. This group cites an above-average incidence of problems, lack of communication and unmet promises. While this group’s responses aren’t unexpected, they are often vocal about their displeasure, making an average of 9.0 negative comments compared with the study average of 0.7.

Satisfied customers who feel they made a decision too quickly. The second situation is more unexpected, according to survey authors. This group tends to be very price-focused and frequently obtains multiple quotes. However, on some level they feel the process itself was too complex, even though they were happy with the lender they finally chose.

Among customers who regret their lender selection, 72 percent say they were pressured to choose a particular mortgage product. Their final lender choice is often linked to financial reasons, such as getting a lower rate because they have a relationship with the firm (e.g., checking account with direct deposit).
“This ‘happy buyer’s remorse’ is in part due to customers feeling that circumstances out of their control drove them to a particular choice and that options weren’t totally clear,” says Craig Martin, director of the mortgage practice at J.D. Power. “Like a lot of consumers, they are happy with a good deal, but they can feel that they have to jump through hoops to get the deal. In the end, they may not fully understand exactly what they got, and the longer-term risk for lenders is that customers’ perceptions of the deal may change in the future.”
One potential contributing factor to this condition could be TRID (TILA RESPA Integrated Disclosure). Over the past two years, much of lenders’ attention has been focused on complying with and minimizing the negative effects of these new requirements, which became effective in October 2015. Lenders feared that the new requirements would extend an already lengthy process and negatively affect satisfaction.
While various sources have reported increases in the total number of days for the lending process, findings of the 2016 U.S. Primary Mortgage Origination Satisfaction Study show little change in the perceived speed of the process. Improved communication and setting expectations appropriately helped prevent negative perceptions.
“Whether it is a new regulation, shifting rates or new technology, lenders will continue to face challenges that require them to change,” Martin says.
Key findings
A higher percentage of customers this year said their loan representative always called back when promised, compared with last year (85% vs. 81%, respectively), and their loan closed on the desired date (81% vs. 79%)

Satisfaction is significantly higher among customers buying a home (840) than among those refinancing (821). In the 2014 and 2015 studies, the levels of satisfaction in these groups were nearly identical

Technology is becoming increasingly important, with 28% of customers saying they completed their detailed application online, up from 22% in 2015 and 18% in 2014

Top lenders by satisfaction
Quicken Loans ranks highest in primary mortgage origination satisfaction for a seventh consecutive year, with a score of 869. Quicken Loans performs particularly well in the application/approval process, interaction, loan closing, loan offerings and onboarding factors.

CitiMortgage moves up three positions from fifth in 2015 to second this year, with a score of 851. Ditech Financial, new to the study in 2016, ranks third with a score of 849.

Consumer advice
Plan ahead when researching mortgages. Satisfaction among customers who waited until they found a home to look for a mortgage is 92 points lower than among those who started before they began a home search.

Get more than one quote. Among the 32% of customers who received just one quote, overall satisfaction is 19 points lower than those who get multiple quotes. Satisfaction is 38 points lower among first-time buyers only getting one quote vs. those who get multiple quotes.

Choose a lender based on merits, not just price or affiliation. Customers who say they chose their lender primarily because of price/rate or based on a recommendation are significantly less satisfied than those whose choice is based on other reasons.

Mortgage giant Freddie Mac said Thursday the average for a 30-year fixed-rate mortgage increased to 3.57 percent from 3.54 percent last week. Rates remain near historically low levels, however. The benchmark 30-year rate is down from 3.98 percent a year ago. Its all-time low was 3.31 percent in November 2012.
The 15-year fixed-rate mortgage, popular with homeowners who are refinancing, rose to 2.88 percent from 2.84 percent.

The rates reflect the mortgage market in the week prior to Republican nominee Donald Trump’s election as president. On Wednesday, the day the result became known, bond prices fell sharply. That sent yields higher.

Long-term mortgage rates tend to track the yield on the 10-year Treasury note, which jumped to 2.06 percent from 1.80 percent a week earlier – exceeding 2 percent for the first time since January. Traders have been selling bonds more aggressively to hedge against the possibility that interest rates, which have been extremely low for years, could rise steadily under a Trump administration.

The sell-off in bonds continued Thursday morning, with the yield on the 10-year Treasury note rising to 2.12 percent.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was unchanged from last week at 0.5 point. The fee for a 15-year loan also held steady at 0.5 point.

Rates on adjustable five-year mortgages averaged 2.88 percent, up from 2.87 percent last week. The fee remained at 0.4 point.

WASHINGTON – Nov. 10, 2016 – The U.S. Department of Housing and Urban Development (HUD) is charging landlords in South Florida with discrimination against tenants with disabilities. Rather than a tenant-based allegation, the charge reflects concerns about a visitor who travels with an emotional support animal.

HUD charged three entities in the Florida case: the owner of Hillcrest East Building No. 22, a multifamily development in Hollywood, Florida; the property’s management company, Rhodes Management; and a previous president of the homeowners’ association. The housing discrimination allegation claims they failed to make reasonable accommodations, published discriminatory notices and statements, and attempted to intimidate and retaliate against two family members who filed a housing discrimination complaint.

One individual lives at the subject property, and the other person, who has a disability, was allegedly prevented from visiting her cousin at the property because she requires the use of an emotional support animal.

HUD’s charge also alleges that the owners and managers discriminated against persons with disabilities by requiring personal and unnecessary medical information in order to grant reasonable accommodations, and by prohibiting emotional support animals and their owners from having access to the development.

The complete HUD charge is posted online.

The charge will be heard by a United States Administrative Law Judge. If the administrative law judge finds after a hearing that discrimination has occurred, he may award damages to the complainants to compensate them for the discrimination and may assess a civil penalty

The Fair Housing Act makes it unlawful to discriminate based on disability in the sale, rental, and financing of dwellings, and in other housing-related transactions, including refusing to make reasonable accommodations in rules, policies, practices, or services. In addition, Section 504 of the Rehabilitation Act of 1973 prohibits discrimination on the basis of disability by any program or activity receiving federal financial assistance

ORLANDO, Fla. – Oct. 22, 2015 – Florida’s housing sector continued its momentum with more sales, rising median prices and a tight inventory of homes for sale in September, according to the latest housing data released by Florida Realtors®. Closed sales of existing single-family homes statewide totaled 23,574 last month, up 13.4 percent over September 2014.
“Florida’s housing sector continues to show strength with more closed sales and an uptick in new listings,” says 2015 Florida Realtors President Andrew Barbar, a broker with Keller Williams Realty Services in Boca Raton. “September marked the 46th month that statewide median sales prices increased year-over-year for both single-family homes and townhouse-condo properties. Sellers received a higher percentage of their original list price, with single-family homes getting on average 94.3 percent and townhome-condos getting 93.2 percent on average. It also took less time to make the sale in September: a median of 46 days for single-family homes and 53 days for townhouse-condos.
“Sellers should take advantage of the strong market conditions with rising median prices, while would-be buyers can benefit from interest rates that currently remain at historically low levels and greater access to mortgage financing.”

The statewide median sales price for single-family existing homes last month was $199,900, up 11.1 percent from the previous year, according to data from Florida Realtors Industry Data and Analysis department in partnership with local Realtor boards/associations. The statewide median price for townhouse-condo properties in August was $150,000, up 5.1 percent over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

According to the National Association of Realtors®(NAR), thenational median sales price for existing single-family homes in August 2015 was $230,200, up 5.1 percent from the previous yearthe national median existing condo price was $217,400.In California, the statewide median sales price for single-family existing homes in August was $493,420; in Massachusetts, it was $365,000; in Maryland, it was $270,956; and in New York, it was $252,500.

Looking at Florida’s townhouse-condo market, statewide closed sales rose last month with a total of 9,348, up 8.4 percent compared to September 2014. The closed sales data reflected fewer short sales in August: Short sales for townhouse-condo properties declined 43 percent while short sales for single-family homes dropped 36 percent. Closed sales typically occur 30 to 90 days after sales contracts are written.

“The Florida real estate market continues to hum along,” says Florida Realtors Chief Economist Dr. John Tuccillo. “We’re seeing increases in both sales and prices in virtually every metropolitan statistical area (MSA) and in both single-family homes and townhouses and condos. Inventory continues to decline and those declines have now reached homes at the $250,000 level.

“However, with pending sales down, mortgage accessibility increasing and interest rates due to rise, we think the market will even out as we go forward into 2016.”

Inventory continues to tighten, with a 4.4-months’ supply in September for single-family homes and a 5.2-months’ supply for townhouse-condo properties, according to Florida Realtors. Most analysts consider a 6-month supply of inventory as the benchmark for a balanced market between buyers and sellers.

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 3.89 percent in September 2015, down from the 4.16 percent average recorded during the same month a year earlier.

To see the full statewide housing activity reports, go to Florida Realtors’ website under “Research.” Association members (login required) also have access to local data specific to their market.

NEW YORK – Aug. 5, 2015 – What building materials are trending in new-home construction? The latest Annual Builder Practices Survey, conducted by Home Innovation, reveals what buyers can expect to see in the new-home market.

1. Garages: The garage door is getting more enhancements, including windows, insulated doors, and doors made of composite or plastic materials. In 2014, 32 percent of all new single-family homes had bays for three or more cars – the most ever recorded in this study’s history.

2. Flooring: Carpeting continues to be the most popular flooring option for new construction, included in about 83 percent of all new-home bedroom installations. However, only about 40 percent of living rooms now have carpet. Hardwood flooring – both solid and engineered– is the second most popular type of flooring included in 27 percent of all new-home installations. Ceramic tile (which appears in 72 percent of all bathroom floor installation) follows in third place, making up 20 percent of all new-home floor installations.

3. Countertops: For kitchen countertops, granite continues to reign in two out of three homes (64 percent of new-home installations). Quartz/engineered stone is gaining popularity while laminate, solid surfacing and ceramic tile are losing appeal.

4. Appliances: Cooktops and wall oven combinations are gaining in popularity and make up about 24 percent of the market, compared to freestanding ovens (45 percent). Freezer-on-bottom refrigerators are gaining in popularity at 19 percent, while side-by-side has fallen to 28 percent of the share.

5. Kitchen sinks: More buyers are paying attention to their kitchen sink, with the single basin kitchen sink making a comeback, growing from 5 percent to 20 percent of all new single-family homes in the past decade. Also growing in popularity are granite/stone kitchen sinks (at 8 percent). One-piece cultured marble lavatories are continuing to decline in demand.

IRVINE, Calif. — July 30, 2015 — RealtyTrac released its second quarter (Q2) 2015 U.S. Home Equity & Underwater Report, which listed four Florida cities at the top of the list for homes seriously underwater – properties where the homeowners owe at least 25 percent more than the home’s current market worth.

In addition, RealtyTrac looked at underwater homes that are also in the foreclosure process.

In the same Florida cities, over half of the homeowners going through foreclosure were seriously underwater:Lakeland (54.8 percent of foreclosures seriously underwater), Tampa (51.7 percent), Palm Bay (51.5 percent) and Orlando (51.2 percent).

Statewide, 23.6 percent Florida of homeowners with a mortgage were seriously underwater in the Q2 2015 – a drop from 23.8 percent in the first quarter and 30.3 percent year-to-year.

On the flipside, RealtyTrac found that 17.6 percent of Florida owners with a mortgage were “equity rich” with at least 50 percent equity. That’s a slight drop for the first quarter’s 17.8 percent but an increase from 15.9 percent year-to-year.

Looking only at homes in foreclosure, 62.8 percent in Florida were seriously underwater, while 18.6 percent, even though going through foreclosure, were equity rich.

“Strong South Florida price increases over the past few years have moved many homeowners from negative to positive equity. We would encourage the remaining distressed homeowners to ask for a Broker Price Opinion (BPO) regarding the value of their property – many may be surprised at their improving value,” says Mike Pappas, CEO and president of Keyes Company in South Florida.

National numbers

Nationwide, 13.3 percent of all properties with a mortgage were seriously underwater in Q2, an increase from 13.2 percent of all homes in the first quarter. However, they dropped from 17.2 percent year-to-year. At the peak of the foreclosure crisis in 2012, the percentage was 28.6 percent.

“Slowing home price appreciation in 2015 has resulted in the share of seriously underwater properties plateauing at about 13 percent of all properties with a mortgage,” says Daren Blomquist, vice president at RealtyTrac.

“However, the share of homeowners with the double-whammy of seriously underwater properties also in foreclosure is continuing to decrease and is now at the lowest level we’ve seen since we began tracking that metric in the first quarter of 2012,” he adds.